China’s move to rein in refinery expansion puts the world’s number two oil consumer in the delicate position of balancing its desire for a low profile in jittery markets against the risk of tightening global supply.

Sinopec Corp, Asia’s top refiner, said it would slow down investment in new capacity, a strategy that fits into Beijing’s plan to avoid over-building as well as focusing on a domestically driven economy.
It contrasts with the trend in most other countries, however, where politicians in a panic over high prices are exorting big oil companies to step up refining investment, easing a bottleneck that has helped drive oil high. For Beijing, the motivation may be its hope to appear as energy self-sufficient as possible and to ensure that it does not again get blamed for surging prices.
Analysts say China’s 35 percent jump in crude imports last year was a catalyst for soaring oil. Import growth has slowed to four per cent this year, although prices have carried on rallying.
“Our strategy is to keep imports and exports balanced to maximise our own refining capacity,” said Li Dong Mei, who advises on Sinopec’s development strategy.
By matching refining expansion with an anticipated slowing in consumption growth, China would limit its need to import crude and curb exports of fuels such as gasoline.
It has taken other measures this year, such as suspending export incentives, despite the robust profits on offer in international markets, and maintaining crude purchases via term contracts at a high 70 per cent of total imports.